The extended summers in the north and strong demand post-second wave of covid led to strong growth on y-o-y basis for Blue Star | Q2 FY22 Conference Call Highlights

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  • The extended summers in north and strong demand post second wave of covid led to strong growth y-o-y. The commercial and institutional demand is picking up. Healthy collections led to reduced borrowings with Rs. 44.34 crore net borrowing with D/E ratio of 0.05x.
  • EMP (Electro- mechanical Projects): The order inflow stood at Rs. 709 crores versus Rs. 680 crores in Q2FY2021. The carry forward order book was up 8.2% y-o-y at Rs. 2240 crore.
  • Unitary products: The company has maintained market share of 13% in Unitary cooling products. The growth in refrigeration is slightly ahead of Room ACs. Vaccination related opportunities have played already played out with covid receding. It has applied for PLI for sheet metal and heat exchangers. The company expects to reach 8-9% EBIT margin by Q4FY2022. The EBIT margin target for FY2022 was 6.5%.
  • Price hikes: The company took a 3% price increase w.e.f. September 2021. Year till date it has taken 12-14% price hikes in 3-4 instalments in UCP (Unitary cooling products) segment.
  • Inventory: The inventory is now at normalised level. The Inventory is higher as it has started procuring components for Q3 and Q4 earlier to account for global disruptions.
  • Capacity expansion: The deep freezer plant at Wada is expected to be commissioned by January 2022 which will double its deep freezers production capacity. The company broke ground on Sri city lands few weeks back. It expects to complete the first phase by October 2022. The plant will have phased roll out of products with Room ACs to begin with. The company has been expanding and deepening channel in North over past couple of years with its mass premium product range. Now North and South contribution is equal at 35% followed by West and East. The normal capex for FY2023 will be Rs. 100 crores.
  • The tax rate for FY2022 will be same as H1FY2022. Next year, it will be moving to lower tax regime leading to 28-30% effective tax rate for FY2023.

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